How Do You Recognize When Good Trading Has Arrived?
Have you ever been at that point where it
just seems like things are in such a grind that it is really tough to muster up
the desire to do anything? Sure, we have all been there, and even though as
traders we are deeply passionate about our profession, there comes a time when
you just say, “This sucks!”
That would be one way of describing the current trading market (yes, there
are trades on longer time frames), but for those of us doing
HVT, things are pretty darn slow. But rather
than going on about something I have no control over, I made an effort this
weekend to put myself in the right frame of mind for when the market loosens up
(and it will).
As you may well know, in any given year a vast majority of a trader’s income
is made in tiny pockets of time. For instance, this year, the second, third and
fourth weeks of July were some of the best trading seen in almost two years. If
you recognized this, you had to step up and take advantage. Several of my
friends and colleagues as well as myself transformed what was until that point
an “average” year into something “above average.”
So, while I do not anticipate that a pocket similar to that is right around
the corner (too bad), better trading is certainly not far off. Naturally the
question is, “How do you recognize when good trading has arrived?”
The answer is pretty straightforward. I refer back to one of my principal
rules that has seen me through the years: “Are the S&Ps exhibiting 3+ point
moves on the one-minute chart intraday?” Now remember what I mean by this:
- The range between the trough and the peak of each move, not the range over
a 10- to 15-minute period. Given that the average duration for an HVT
trade is less that five minutes, the range needs to be covered within that
time frame. - The move needs to be quick and sharp. Slow grinds up and down are not real
conducive.
Let’s look at the charts below. They illustrate the difference quite clearly.
The main difference between these two charts is the “velocity” in which the
upward moves take place. In chart 1, the move up is quick and decisive, unlike
the second chart where the move is a bit more labored as is the price action
preceding it.
A good rule of thumb is this: If there have not been any real convincing
moves up or down like seen in chart 1, wait for a couple of quick moves, then
jump in the ring. You will drive yourself nuts and give away capital trying to
catch the breakout of a narrow and choppy range.
Key Technical
Numbers (futures):
S&Ps |
| 916 |
| 906 |
| *903* |
| 895 |
| 886 |
| 882 |
| *872* |
*These numbers were put together before Monday’s opening. You will also want
to keep an eye on 924-27.
*Indicates a level that is more significant.
As always, feel free to send me your comments and
questions. See you in TradersWire.